Weekly Intelligence Notes #28-00
16 July 2000

WEEKLY INTELLIGENCE NOTES (WIN) #28-00 dtd 16 July 2000

Commentary and opinions included are those of the WIN Producer/ Editor Roy Jonkers or the associate editors [RADM (ret) Don Harvey or Professor (ret) John Macartney], or the contributor listed in the tagline.

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PRESIDENT NOMINATES MCLAUGHLIN AS DEPUTY DCI -- As expected, President Clinton has nominated John E. McLaughlin, 58, a former Deputy Director for Intelligence, as the Deputy DCI to replace Air Force General John A. Gordon, who left to become the head of the new National Nuclear Security Administration. McLaughlin has advocated the need for long-term research and expertise. He created special career tracks to keep veteran analysts from jumping to management positions, and started a new training academy for incoming analysts, the Sherman Kent School for Intelligence Analysis. He is not expected to have difficulty in getting Senate confirmation.

-- A former spy and his wife who defected to the United States from Eastern Europe are suing the CIA for breaking its promise of an income and healthcare for life. The unprecedented legal action could pave the way for scores of other defectors to pursue complaints that they have been short-changed after risking their lives to provide intelligence information. The couple, in their late fifties, who live in Seattle under false names, are said by their lawyer to be almost penniless since the CIA cut off their $27,000 a year payment.
Their case, and those of others, have led to fears that other potential defectors from China, North Korea and Iraq may be discouraged from coming forward. "It does not encourage people to defect when they see stories like this," said William Geimer, president of the Jamestown Foundation, an organization that works with former spies.
The Seattle couple first contacted US intelligence from a diplomatic posting at the height of the Cold War, but were asked to remain in place to gather more information before being allowed into the US in the early Eighties. They signed an agreement which guaranteed them health insurance and $18,000 a year, rising to $27,000. According to their lawyer, Steven Hale, they lost their benefits when the husband found a job which paid more, but were promised that the Agency "would always be there" and would resume support if they needed it. When he was laid off three years ago, the CIA told him that its obligations were over. Mr Hale said: "They feel betrayed."
The case threatens to expose what critics, including former US agents, allege is a frequent failure by the CIA to live up to its promises. There are an estimated 700 defectors living in the US. Many have been able to make their own way independently of the agency, after being helped with housing and education at first. But others find it more difficult. One former US intelligence official said: "You may have been a professor of Marxism at Moscow University. But what do you do here? You have to start working at McDonald's." CIA officials say, however, that most of the disputed cases arise from misunderstandings and that what a defector gets depends on the value of their secrets.
In another rare publicized case Victor Sheymov, a former KGB major who brought detailed knowledge of Soviet code and communications systems, won a secret settlement with the CIA after James Woolsey, a lawyer and former director of the agency, took up his case. Mr Sheymov, who has now started a computer security business, believed he had been promised $1 million to defect but received just $200,000 -- though the CIA also paid for a house, a car, college courses and private schooling. Before the settlement he had claimed that the CIA's word was "worthless."
(Sunday Telegraph, 16 July 2000 / David Wastell)

US TO ALLOW EXPORT OF ENCRYPTION -- For the last several years, NSA, the FBI and other law enforcement agencies have been fighting (and losing) a battle against allowing the export of "unbreakable" encryption software. Because software makers abroad were selling such encryption and because domestic versions of programs like Netscape or IE5 could be electronically exported so easily, the battle is lost. According to the Washington Post (7/15), the govt will announce this week that, with few exceptions (N Korea, Iraq, etc), it is abolishing restrictions on the export of sophisticated encryption technology.

WEN HO LEE CASE MAY BE DECIDED OUT OF COURT -- The prosecution of former Los Alamos physicist Wen Ho Lee may be headed for mediation after a federal judge ordered lawyers on both sides to pick one or more senior judges to oversee negotiations on terms for bail and a possible plea bargain. Federal officials indicate a plea bargain may be possible if Lee explains why he created the tapes and what happened to them. He has claimed the tapes were destroyed. Lee faces 59 counts of mishandling information and violation of the Atomic Energy Act. He has been in jail, segregated from other prisoners, for eight months, working on a mathematics textbook and his defense. (Wash Post 16 July 2000, P. A9)
http://www.washingtonpost.com/wp-dyn/articles/A47664-2000Jul15.html  (Jonkers)

SHI'ITE GUERRILLAS IN SOUTHERN IRAQ ALLEGEDLY REJECT COVERT CIA SUPPORT -- A guerrilla commander from the marshes of southern Iraq agreed to a series of meetings last fall with CIA officials interested in undermining Iraqi President Saddam Hussein. But Sayid Khaddem Al-Batat said in an interview this week that he declined to accept covert CIA support. Believe it or not. (V. Loeb July 14 WashPost.)
http://www.washingtonpost.com/wpdyn/articles/A404562000Jul13.html  (Macartney/Jonkers)


SCIENTISTS BEING POLYGRAPHED AT LOS ALAMOS -- The DOE polygraph program at Los Alamos is well along. So far over 800 scientists have been polygraphed. About 20% showed signs of deception but all cases were given the benefit of the doubt. Inevitably comparing it to the Wen Ho Lee case (who passed and then, upon reexamination, was said to have flunked) , critics stated that examiners could "find what they wanted" in test results. (WashPost 16 Jul 2000, p. A8)
http://www.washingtonpost.com/wp-dyn/articles/A50985-2000Jul15.html  (Jonkers)

IRANIAN MISSILE TEST SUCCESSFUL -- Iran successfully test-fired its Shaab-3 medium range (800 miles) ballistic missile on July 15th. This was the same type of missile that blew up during its first test in 1998. The Shahab is believed to be a version of North Korea's No Dong missile.
Iran launched an ambitious domestic arms development program during the war with Iraq (1980 - 1988) to overcome weapons shortages caused by the US embargo (when we supported Iraq's Sadam Hussein with arms and intelligence). Since 1992 Iran has reached a measure of self-sufficiency in arms, producing its own tanks, armored personnel carriers, missiles and a fighter plane. Iranian state television stated that "This test is not in any way a threat to another country."
Israeli Deputy Defense Minister Ephraim Sneh expressed concern over the successful missile test. He added that Israel is "prepared to forestall" the dangers of Iran's weapons technology. (WashPost Jl 16, p. A21) (Jonkers).

CHINA WARNS US ON MISSILE DEFENSE -- China's top arms control negotiator has warned that US deployment of a national missile defense system would risk collapsing the whole architecture of China's arms control and nonproliferation agreements.
In addition, Sha Zukang, Director General of the Foreign Ministry's Department of Arms Control and Disarmament, also stressed that sale of U.S. technology to Taiwan for a smaller-scope theater missile defense system would "lead to serious confrontation" because it would be tantamount to establishing a military alliance between Taipei and Washington. "This is of supreme national interest," Sha said in an interview. "It will be defended at any cost."  http://www.usatoday.com/news/washdc/ncsthu08.htm  

The House Permanent Select Committee on Intelligence (HPSCI) recently reported out on its evaluation of the Defense Human Intelligence Service (DHS) with a mixed bag of conclusions. The DHS was created in late 1995 with a consolidation of DoD's overt and covert human intelligence (HUMINT) elements.
The HPSCI report states that the military's capabilities in the HUMINT field are "acceptable" (a grade of C?) and continuing to improve, but a number of hurdles must be cleared before DHS is a fully established organization. "HUMINT coverage is nonexistent or in short supply in many areas of the world where the United States may find it necessary to deploy troops," the committee stated.
Managed by DIA, about 80 percent of the DHS work is in overt collection, and 20 percent is devoted to development of clandestine human sources. (As a side commentary, it should be noted that the vociferous proponents of open source intelligence would consider this a disproportionate split in favor of the covert side.)
The committee liked the fact that the DHS provides a "single point of planning and coordination for almost all clandestine defense HUMINT." ( Almost invariably, Washington-centered entities in both the executive and legislative arms of government prefer consolidation of support functions such as intelligence regardless of the specific mission and needs of the parent organization that created the support function unit in the first place.)
The HPSCI said in its report that it agrees with the conclusions reached by the review of defense human intelligence activities recently completed by Lt. Gen. James Clapper, which included 75 individual recommendations.
The Congressional report also said, "The committee believes that the need for additional DHS resources can be better articulated and defended. At a time when some in Congress are questioning the need for new {Defense Attach´┐Ż Offices), the Director of Central Intelligence, the Secretary of Defense, and other seniors in the intelligence community must provide the leadership that has been lacking to this point." This last statement would seem to make it rather clear that the HPSCI does not give high marks to senior administration leaders in their support for defense HUMINT. ( Defense Information and Electronics Report, 2 June 2000) (Harvey)


FBI's CARNIVORE UNDER PRESSURE -- Civil liberties and privacy groups are railing against a recently deployed FBI system nicknamed CARNIVORE, designed to allow law enforcement agents to intercept and analyze email in the course of an investigation. When CARNIVORE is placed at Internet Service Provider sites it can scan all incoming and outgoing emails for messages associated with a criminal investigation.
The American Civil Liberties Union demanded on Friday that the FBI reveal the computer source code and other information about automated systems to wiretap e-mails of criminal suspects. The ACLU filed a Freedom of Information Act request seeking all of the codes, records, letters and memorandums related to the FBI programs dubbed ''Carnivore'', ``Omnivore'' and ``Etherpeek.''
Congress is also set to hold hearings on CARNIVORE. Dropping the proverbial cherry atop the FBI's ice-cream sundae of a week, a congressional subcommittee announced late Thursday it would hold a hearing to investigate the law enforcement agency's controversial e-mail surveillance device. Disregarding the lateness of the legislative session, Rep. Charles Canady, R-Fla., said his House Constitution Subcommittee would hold hearings to address concerns surrounding CARNIVORE, the year-old surveillance technology that allows the FBI to sift through millions of private e-mails in order to find potential criminal evidence.
EarthLink Inc, one of the country's largest Internet service providers (ISPs), initially refused to install a new FBI electronic surveillance device on its network, stating that it disrupted Internet access for some customers. But EarthLink reached an agreement with the FBI whereby it avoided using CARNIVORE and instead installed its own snooping software for the FBI after it lost a decision on the matter in federal court.
An FBI explanation of CARNIVORE can be found at the FBI website http://www.fbi.gov/programs/carnivore/carnivore.htm
(FFJrnl 13 Jul2000, p.A8) (Levine's Newsbits) (Jonkers)

UK INTERNET MONITORING LAW PASSES TEST IN HOUSE OF LORDS -- An amendment that would significantly limit government powers to access encryption keys was defeated by just one vote in the House of Lords Thursday. The RIP (Regulation of Investigatory Powers) Bill has become the government's most controversial pieces of Internet legislation. Sweeping powers to snoop on email have met with widespread criticism. The business community is particularly worried that clauses giving law enforcers access to encryption keys will damage UK e-commerce. http://www.zdnet.co.uk/news/2000/27/ns-16618.html

INFORMATION WAR -- HACKERS PLANT FALSE INFORMATION ON MILOSEVIC IN WEBSITE -- Hackers broke into the website of Yugoslavia's main pro-government daily and posted a fake report saying
President Slobodan Milosevic had been killed in a bomb explosion, a source at Politika said on Thursday.


RED MAFIYA: How the Russian Mob Has Invaded America
, by Robert J. Friedman, Little Brown, 296 pp. New York freelancer Friedman tells a tale of how over the last two decades Russian criminals have been in the vanguard of international money laundering, drug dealing and weapons sales. Friedman provides a detailed road map of inroads made by Russian organized crime into US communities from Brighton Beach to Miami Beach, and infiltrations of major institutions like Wall Street. Russian mobsters present a unique and new kind of threat, according to the author, because they have built a strong international organization that stretches from Moscow to the United States and Israel, one combining old-fashioned brutality with high-technology skills.
The author traces the arrival in Brighton of 40,000 Russians Jews, including a substantial number with extensive criminal backgrounds, as the turning point. He describes the careers of some of these criminals, including Semion Mogilevich, who has created an international criminal enterprise known as Red Mafiya. Relying on political and police connections in Hungary, Israel, Russia and other countries, Mogilevich has conducted numerous international criminal scams. One of there surfaced recently in the laundering of billions of dollars through the Bank of New York. Russian mafias are said to be a target of the FBI and CIA data collection. (reviewed by Peter Stone, Book World 16 July00)

THE UNWANTED GAZE: The Destruction of Privacy in America, by Jeffrey Rosen, Random House 274 pp. In elegant and graceful prose, Rosen examines the technological, cultural and legal ways in which our right and ability to keep our private lives private, have, as a practical matter, ceased to exist. In cyberspace, for example, every website visited, every store we browse, every magazine we skim, can be traced back to us. Rosen, the legal affairs editor for the New Republic, explains complex legal cases with a rare clarity, and states the case convincingly. (reviewed by Michael Mello, Book World 16 July00, p. 8). Intelligence and counterintelligence, as well as criminal intelligence, must be kept in balance with the need for personal liberty and privacy in a healthy society. The technological, political and legal challenges are complex - objectives and causes that are well-meant can lead to repressive results. Balanced vigilance must be maintained. (Jonkers).

NSA SECURITY AND INTRUSION DETECTION GLOSSARY -- To aid in the understanding of technical issues, the NSA published a classic glossary of security and intrusion detection terms, which has proven to be an invaluable resource to the security-conscious Internet citizen. From the normal user feeling overwhelmed by all the security jargon in use today to the master consultant who needs to look up and research an occasional unknown word, this glossary has something to offer to everyone. (Briefme Mag., 29 Jun 2000) http://www.briefme.com/a/article.cgi?id=26955&uid=175864

SECURITY ENCYCLOPEDIA -- If you can get past the frames at the Encyclopedia of Computer Security, you are in for a learning experience. They cover news, products, white papers, legal issues, and security events. They also provide a glossary for security terms and a very complete tutorial on how to secure your computer. (Briefme Mag., 29 Jun 2000)

CONGRESSIONAL RESEARCH SERVICE REPORTS -- CRS reports are available, it seems, from a commercial source for a price. Many of these are on intelligence and prepared by CRS's excellent intelligence analyst, Dick Best -- and they are excellent.  http://pennyhill.com/intact.html

"FURORE" IN BRITAIN OVER MEMOIRS OF FORMER M.I.5. CHIEF -- According to the London Telegraph, British officials have accepted that they have little chance of stopping Stella Rimington, the former MI5 director general, from publishing her memoirs. ... M.I.6., the foreign intelligence service, and GCHQ, the intercept and codebreaking organization, are fiercely against allowing Dame Stella to publish. http://www.telegraph.co.uk/et?ac=003100565149417&rtmo=Qx3LeH3R&atmo=HHHHHH8L&pg=/et/00/7/15/nstel15.html  

Michael Herman, author of the acclaimed book, INTELLIGENCE POWER IN PEACE AND WAR (Cambridge U Press, 1996), will be in Washington in early October and may be available to lecture. Herman was a senior officer in Britain's GCHQ at Bletchley Park before his retirement in 1987, and since then has been writing on intelligence matters as well as teaching at Kings College London and lecturing at other colleges and universities in Britain and the US. He is currently organizing a set of seminars for St Antony's College Oxford. Professor Herman can be reached by e-mail at  Mhe24@aol.com  (Macartney)

US JOINT MILITARY RESERVE INTELLIGENCE PROGRAM.  http://www.totalforceintel.com/  

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